James G. & Katherine Bourekis - Page 3

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               James G. and Katherine Bourekis (petitioners) claimed a loss           
          on their 1981 Federal income tax return related to their                    
          investment in PCS Ltd. Partnership (PCS or the partnership).                
          Following an examination of the partnership, respondent proposed            
          to disallow a substantial portion of petitioners' claimed loss.             
          As a consequence of these developments, petitioners (1) agreed to           
          extend the period of limitations for their 1981 tax year and (2)            
          agreed to be bound by the Court's redetermination of the PCS loss           
          issue in Kantor v. Commissioner, T.C. Memo. 1990-380, affd. in              
          part and revd. in part 998 F.2d 1514 (9th Cir. 1993).                       
               In June 1996, petitioners received a letter from Revenue               
          Agent Janet Kenley, along with a copy of the opinion issued by              
          the Court of Appeals for the Ninth Circuit in Kantor, a Form 4549           
          (an examination report), and a Form 870 (a closing agreement).              
          In the letter, Revenue Agent Kenley advised petitioners that a              
          final decision had been entered in the Kantor case sustaining               
          respondent's determination disallowing the PCS loss.  The Form              
          4549, which contained a computation of petitioners' 1981 tax                
          liability including the disallowance of petitioners' distributive           
          share of the PCS loss, indicated that petitioners are liable for            
          a deficiency in tax in the amount of $4,472, as well as statutory           
          interest on the deficiency computed through June 30, 1996, in the           
          amount of $15,174.  Revenue Agent Kenley's letter, which also               

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